TELLING IT LIKE IT IS – An online gambling CEO writes about the UIGEA
Joe Saumarez-Smith, the CEO of the UK based management consulting firm Sports Gaming and owner of a number of online gambling interests came out with guns blazing on the Unlawful Internet Gambling Enforcement Act this week in an op-ed piece on the Bloombergs news website. Under the title “”Internet Gambling Act Should Be Scrapped”" JSS is sharply critical of the UIGEA, which seeks to bring about the ruin of the online gambling pastime in America by disrupting financial transactions with online gambling companies. Yet twelve months later, there are just as many people gambling online, if not more, he points out. And many bettors don’t even know the law was changed, partly because it was tacked on as an amendment to a measure aimed at increasing port security. In Saumarez-Smith’s view the biggest difference nowadays is that the companies offering online gambling are privately held and operate out of countries where it is impossible to know who controls them; and in the case of a big win, the risk of not being paid is probably much higher, opines. The major public companies that used to offer online betting to Americans, such as PartyGaming plc, 888 Holdings plc and Sportingbet plc, all quit the U.S. market last October at a cost of several billion dollars to their shareholders. And the dilatory manner in which US officialdom has introduced the supporting regulations for UIGEA – well over the deadline set by Congress – remains in progress, allowing online poker rooms, sports bookies and casinos to continue to get money from and send money to their customers, albeit not as easily as a year ago. Saumarez also hits out at the notorious carve-outs in American legislation which permit Americans to place online bets on lotteries and horse racing, and he draws attention to the large number of legal casinos, poker rooms, racetracks or Off Track Betting centers, and state lotteries feeding the overall gambling industry. “”The situation is, in short, a mess,”" he opines. “”As America learned during Prohibition, some bans are unrealistic. The online gambling law shows that legislators weren’t paying enough attention in history class. “”At least Prohibition aimed to prevent the consumption of alcohol across the U.S. without exceptions. Banning some types of online gambling while allowing exemptions for lotteries and horse racing is protectionism of the worst kind,”" he adds. Following the lead of most legal experts, Saumarez also emphasises that UIGEA seeks to criminalise those it describes as being “”in the business of betting” making it illegal to handle money for the purpose of online gambling. “”That means individuals still aren’t breaching any federal law by placing bets,”" he stresses, revealing that the daily number of poker players online worldwide was about 34 000 in September, down less than half a percentage point from a year earlier, according to Dennis Boyko at PokerPulse.com in Vancouver. Poker players online in the U.S. have dropped only slightly, said Boyko, who has monitored the number of online players since January 2003. The sensitive subject of problem gambling is also addressed by Saumarez, who says that UIGEA supporters argued that banning online gambling would lower levels of gambling addiction. But he goes on to counter this claim by quoting Kevin Whyte, executive director of the National Council on Problem Gambling in Washington, who is on record as saying: “”We do not see any decrease in the number of online gamblers seeking help”", and “”As with alcohol and drugs, prohibition of online gambling is one of the most ineffective ways of addressing a public health problem.” But JSS concedes that the law may have made it harder for children to gamble online, for balance quoting Dan Romer, research director of the Adolescent Risk Communication Institute of the Annenberg Public Policy Center, who said its annual survey shows a reduction in underage gamblers on the Internet. The strengthening World Trade Organisation storm which the US faces over its discriminatory online gambling practices and consequent unprecedented withdrawal of treaty agreements is also considered by Saumarez. “”If legislators were brave, they would use the WTO ruling as an excuse to reverse the Unlawful Internet Gambling Enforcement Act and instead legalize and tax the online gambling industry,”" he suggests. “”That would allow the U.S. government to know who was offering its citizens the chance to gamble, and to impose rules and restrictions that would prevent children and vulnerable groups from placing bets. It would also generate vast tax revenues.”" Saumarez ends his article with a plea to legalise and regulate online gambling in the United States. Despite the opposition to this by the major sports leagues in the US, the fact is that in pretty much every town across the U.S. you can place a bet at a local bar or barber shop and that the people who suffer financially when a game is fixed are the bookmakers, who have to pay out the winnings, he opines. “”Almost all the point-shaving scandals of recent years have been uncovered because Las Vegas bookies noticed unusual betting patterns and pointed them out to the relevant authorities. If all betting could be done through legal channels, then these markets would be easier to police.”" The inescapable conclusion is that laws that are either widely disobeyed or unworkable are bad laws. A year after its passing, the Unlawful Internet Gambling Enforcement Act is both disobeyed and unworkable, Saumarez concludes. “”The sooner it’s scrapped, the better.”" Abstract from casinomeister.com/news”
UNIBET BOSS IN CUSTODY
Mainstream media in Britain, France and the Netherlands is reporting on the arrest of Swedish online gambling group Unibet’s outspoken CEO, Petter Nylander today (Monday) It is believed the executive was arrested at Amsterdam’s Schipol Airport whilst boarding a flight back to his home in Britain. The DutchNews organisation reported that Nylander was detained on a warrant of arrest issued by the French authorities and forwarded to Dutch police to execute in what is almost a duplication of the American arrests ‘in transit’ of David Carruthers of BetonSports and Peter Dick of Sportingbet last year. Reacting to the news in a statement, Unibet said the arrest pertained to proceedings filed in 2006 by the French gaming monopolies Francaise des Jeux (FDJ) and the PMU. The charges relate to breaches of laws dating back to 1836 and 1891. Unibet’s chief financial officer and deputy chief executive Ragnar Hellenius has been appointed by the board of Unibet as acting chief executive until Nylander is released. He commented: This situation is clearly unacceptable and extraordinary in ours and in any industry. The BBC opined that the timing of the detention may embarrass the French government, which only last week said it wanted to liberalise the online gambling market in France. The comments followed criticism from the European Commission that France’s current stand on overseas gambling firms broke European competition rules. In the summer, the French government lost a European legal challenge against Maltese online betting firm Zeturf, which was given the go-ahead to legally operate in France. In June this year, Unibet’s cycling team was banned from competing in the Tour de France, after the race organisers ruled that its participation would contravene French rules that outlaw advertising by foreign gambling firms. Unibet said at the time that its sense of injustice was compounded by the fact that the race’s main sponsor was French horse racing betting monopoly PMU. DutchNews recalled that Unibet is also under fire in the Netherlands which regards Unibet’s online betting as illegal because all gambling in the country must be in the hands of state owned companies….another point of friction with European Commission officials. The European Commission is currently investigating the Dutch gambling monopoly and has already threatened to sue France, Sweden and Greece for banning foreign companies from the gambling market. The Financieele Dagblad reports that a court in Utrecht ordered Unibet to stop all its activities in the Netherlands at the beginning of October, and demanded the company pay Euro 100 000 to state-owned gambling monopoly firm De Lotto for every day it continues to operate. Abstract from casinomeister.com/news
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ONLINE GAMBLING’S GIGAMEDIA GOING LIKE A BOEING – Shares hit 7 year high
“The Taiwan-based Gigamedia group, which took over the Canadian turnkey provider Grand Virtual and owns online gambling operations such as Everest Poker, Imperial Casino, Casino Treasure, Casino Lux, Casino Fantasy, Casino Glamour and Casino Elegance is riding the crest of the wave at present despite competitive trading conditions. Shares in the company hit a 7-year high last week, continuing a remarkable rise over the last two months after Bear Stearns analyst James Rhee gave the stock an “”Outperform”" rating. The stock slumped to $8.66 in August but launched a strong recovery after GigaMedia released better-than-expected financial results, showing the company had successfully transformed itself from a struggling broadband company to an online gambling and entertainment group with a strong European presence and reach into the burgeoning Asian market. The share price reached the $23 range after Rhee predicted that GigaMedia could benefit from regulatory easing in Europe as the European Commission aggressively pursues the EU free-trade policy. In a note to clients last week, Rhee pointed out GigaMedia revenue is increasing “”at a healthy clip”" and the company has a good investment history. GigaMedia is also attractive as a long-term investment stock due to the company’s Asian presence. The Asian online gambling market is considered a promising region for online gambling companies that get cultural, processing and political considerations right, and is potentially the most valuable of all. GigaMedia has secured a license to offer and operate the multiplayer online role-playing game Holic in China, Taiwan, Hong Kong and Macau as a stepping stone.
Abstract from casinomeister.com/news”
DYNASTY BUYING UP CHINESE FIRMS – Reverse takeover in progress
“Toronto-listed Mahjong provider Dynasty Gaming Inc. has announced details of its intention to acquire all of the issued and outstanding shares of two companies, Junnet Omnimedia Inc. (“”Junnet”"), based in Tortola, British Virgin Islands and Beijing Baihui Digital Stars Co. Ltd. (“”Baihui”"), based in Beijing, China. Both companies are controlled by Dr. Wilson Cho, resident of Hong Kong and Dr. Dominic Chan, resident of Los Angeles, USA. Junnet is a distributor of online prepaid cards in China and a marketer of digital products such as software, music titles, games, video and other products delivered in digital form. Baihui is engaged in the development, installation and technical support of these types of digital products throughout China. Under terms of a Letter of Intent signed on 16 October 2007, Dynasty proposes to acquire all of the shares in these two companies from their current owners in exchange for the issue of 320 million new Dynasty Gaming shares, based on a price of Cdn $0.25 per Dynasty share. This transaction, based on a valuation of U.S. $50 million for Junnet and U.S. $30 million for Baihui, will constitute a reverse takeover (RTO). Dynasty Gaming’s business activities involving online entertainment distribution and game software development will focus primarily on China. One significant condition of the proposed transaction is that Dynasty must first complete a financing for a minimum of U.S. $30 million based on a value of $0.25 per Dynasty share. Exploratory discussions with a possible underwriter for this financing are already underway. The raising of this new funding, to be used primarily for marketing and business development, will result in the issue of an additional 120 million Dynasty common shares. Upon completion of all conditions under this proposed transaction, Dynasty’s issued capital will increase from just over 92.3 million common shares to over 532.3 million common shares, excluding any additional shares that may result from the exercise of 24.7 million options and warrants.
Abstract from casinomeister.com/news”
